This study examines the theoretical and practical tensions and contradictions of multiculturalism in Taiwan. It combines cultural theory, cultural studies, and cultural policy to explore how western theories of multiculturalism can been practised in Taiwan's experience, and discuss the development of cultural policy in Taiwan. Based on its unique history, Taiwanese society is struggling with two problems. One is the lack of common national identity. The clash between Chinese identity and Taiwanese identity has led to other conflicts within the whole society. The other problem is related to inequality among the various cultural communities, which has created a crisis in political legitimacy and social justice. In response to these challenges multiculturalism has become an important influence in cultural policy in Taiwan, and 'multicultural Taiwan' is constructed as a new national identity. Because of the contradictory aspirations of homogeneous national identity and recognition of cultural differences three major challenges are posed by the emergence of multiculturalism in Taiwan. The first is related to national identity. Under the name of 'multicultural Taiwan', the government is seeking to construct a more complex, multifaceted and sustainable version of Taiwanese culture capable of mediating between the diversity and conflicts arising from ethnicity. However, multiculturalism, which is based on the recognition of various ethnic identities, also leads to tension between an integrative national identity and separate ethnic identities. The second challenge is related to cultural policy, which shows the tensions between integration and separation, between individual rights and collective rights in cultural policy. The third challenge is related to citizenship in Taiwan. The new concept of multicultural citizenship demands the acknowledgement of more rights, such as collective rights, cultural rights, minority rights and global citizenship, in defiance of the traditional views of citizenship based on civil, political and social rights, and national boundaries. Three case studies have been selected to reflect each issue: the Taiwanese aborigines, the Hakkas and migrant workers. By considering these three challenges, I try to redefine multiculturalism and cultural policy in the Taiwanese experience. Firstly, I seek to redefine multiculturalism as 'multicultural citizenship' in the case of Taiwan. Multicultural citizenship is seen as a new balance between 'integration' and 'diversity' in the development of multiculturalism in Taiwan. On the one hand, multicultural citizenship is related to the construction of a common public sphere and nation; on the other hand, it is also related to respect for cultural diversity and special communities in the private sphere. Secondly, I try to redefine cultural policy in Taiwan in terms of cultural rights and multicultural citizenship, which embody the link between people and the state. Cultural policy should protect cultural rights and strengthen the relationship between people and cultural policy. Similarly, multicultural policy should be based upon cultural rights and multicultural citizenship. When implemented, it should then improve multiculturalism. Thirdly, I conclude that the problems of national identity and cultural differences should be considered on the basis of multicultural citizenship.